South Africa’s political punditry issues frequent calls for greater accountability on the part of our politicians and state. But they hardly any ever stop to make the obvious connection: before there can be accountability, there must be accounting.
In his wonderful book The Reckoning, historian Jacob Soll shows how accounting has shaped kingdoms, empires and entire civilisations. During the 17th century, for example, the tiny Netherlands transformed itself from a minor possession of the Holy Roman Empire into the most important maritime and economic power in the world, a success surely premised upon control and accountability. The Dutch Golden Age of exploration, art and commerce saw accounting become a central element of everyday education. The lesson? Those who want accountability must know accounting.
The Sun King, French monarch Louis XIV, restored the finances of his impoverished kingdom with the help of brilliant accountant Jean-Baptiste Colbert. The king’s pocket ledgers show how Colbert united the accounts of several competing ministries into one central accounting of the state. Sadly, Louis no sooner created wealth than he started destroying it again – and when his books started conveying the truth of what his overspending was doing to state finances, they stopped appearing. Colbert’s power base was destroyed; the drive to avoid accountability undermined accounting.
The historical lesson is that societies flourish when they harness accounting as part of their general culture. The great Italian city-states of Venice, Genoa and Florence, Holland in its Golden Age, and 18th- and 19th-century Britain and America all integrated accounting into their education curriculum, religious and moral thought, art, philosophy and political theory. In Holland, one would learn accounting at school and practise it in business, civil, and domestic life. There were religious texts about accountability; artists painted warnings about financial hubris into the background of their masterworks; and political pamphlets called for audits using religious language.
Accounting is an essential instrument of great institutions and nations – and yet somewhere along the line we have lowered our aspirations, allowing accounting and finance to become a separate, arcane sphere of knowledge. It doesn’t have to be this way. Accounting literacy is just as easy to achieve as reading and arithmetic; and no young person should leave school without understanding the language. The more every citizen knows about accounting, the more powerfully we can hold our leaders to account.
Author: Peter Frampton (CA)Aus is co-founder and CEO of Color Accounting International